What must a producer do before a policy goes into effect?

Before a policy goes into effect, a producer must collect the initial premium and submit it with the application. This is a critical step in the insurance process because the payment of the first premium establishes a binding contract between the insurer and the insured. Without this initial payment, the insurer has no obligation to provide coverage, and the policy remains in limbo.

Collecting the initial premium is not just a matter of formality; it signifies the applicant's intent to enter into the insurance agreement and activates the coverage as per the terms of the policy. This step also helps ensure that the insurer will have the necessary funds to begin underwriting the risk presented by the application. Once the initial premium is received, the insurer can process the application and is then in a position to issue the policy, provided all underwriting criteria are met.

In contrast, submitting a claim to the insurer or contacting the applicant for additional information happens after the policy is already in effect. Providing a summary of coverage options may be important for informing the applicant, but it does not fulfill the requirement needed for activating the policy.